THE APPLE BEAR MARKET OPTIMIZED MOVING AVERAGE UPDATE MARCH 9, 2013
The Money Flow Indicator hit 5.13 during this past week. Both the RSI and ULT Indicators made brief buy signals shortly afterwards. Thus, this triple buy signal made it possible to take initial positions in this undervalued, oversold, and unpopular high-quality stock. (Click here for the chart for Apple)
But the price action since this triple buy signal has been more of a “dead cat bounce.” Perhaps, the stock is not yet ready to advance. My guess is that the stock of Apple will experience a lot of selling as the end of the quarter approaches. Many money managers with large positions in the stock will not want this on their books at the end of quarter. The stock of Apple will most likely be ready to advance after this selling period is over.
On the trading side, it seems to me that the stock needs one more thrust downward in order to shake out all of the weak hands. It may take a move to the 410-400 price area in order for that to happen. It could do so intraday so a limit buy order may be required in order to capitalize on such a move.
MARKET OBSERVATIONS FOR MARCH 9, 2013: The stock market hit consecutive new highs during the last 6 trading sessions. This is a classic example of letting a powerful move run its course and resisting the urge to short. The upside momentum has probably peaked at this time, but after a short correction, I’d expect at least one more overshoot rally to a new closing Dow high. In order for that scenario to pan out, we first need a sharp and broad correction lasting a week to 10 days. Then one final narrow advance up to a new high which is not confirmed by breadth and other broad-based averages.
Key market indicators show the following:
With many key breadth indicators at or near sell signal levels, I would be looking for a correction to begin on Monday. This will be the first leg down with most likely a retest of Friday’s highs in one to two weeks. Since the “Wall Street Craps Method” discourages both leverage and shorting the market, the best thing to do is remain on the sidelines and let the market correct. Then look for either a short-term upside opportunity in the general market or a trade in the Long Treasury Bond ETF (TLT).
Remember that the sentiment indicators show that market participants are still neutral. This is not a sign of a major top. So a correction here would give nimble traders and investors a chance to ride this market up when the rally resumes.
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APPLE UPDATE MARCH 5, 2013
The Money Flow Indicator hit an extreme reading of 5.13 at Monday’s close. The Relative Strength Indicator has a reading below 30 while the Ultimate Indicator is now under the critical 30 level as well. This qualifies as a triple buy signal and an optimal time period to start buying the stock after its long decline.
Tuesday March 5th could experience a sharp spike down (possibly towards 418-407) to buy into. Don’t be afraid to pull the trigger. It will be difficult to get the perfect price, but now is an optimal time. The RSI and ULT Indicators may have more room to slide on the downside, so it is still possible for lower price over the very near term. I’m just saying that now is a good time to “get your feet wet” with this stock with a chance for a good upside bounce at any moment now.
I liken the current scenario to playing Blackjack where the dealer is showing a “6” up while you are holding an “11” in your hand. You won’t necessarily win the hand, but the act of “doubling down” is the proper way to play the hand. (If the bet is not too large for your bankroll.)
Remember, that while there is a risk in taking a stock position, there is also the risk of missing out on a good opportunity! (Click here for the chart for Apple)
THE APPLE BEAR MARKET OPTIMIZED MOVING AVERAGE UPDATE MARCH 2, 2013
The Money Flow Indicator hit 13.66 with Friday’s close. This is a clear buy signal and the first chance to take a position in Apple. Both the RSI and ULT Indicators are in the low 30s which are also very close to flashing buy signals on any further weakness. Now is the time to gradually wade into this undervalued, oversold, and under-loved high-quality stock!
Note: Monday March 4th or Tuesday March 5th could experience a sharp spike down (possibly towards 420-407) to buy into. Don’t be afraid to pull the trigger. It will be difficult to get the perfect price, but now is an optimal time. Remember, there is also the risk of missing out on a good opportunity! (Click here for the chart for Apple)
THE APPLE BEAR MARKET OPTIMIZED MOVING AVERAGE UPDATE MARCH 1, 2013: I have devised a new indicator for Apple which I call the “Apple Bear Market Optimized Moving Average“. It is a 50-day exponential moving average of the price of Apple. It currently has 3 points that served as the top of small rallies since early October 2012. This will help those who want to buy the stock low but want to get out before it turns down again. As of today, the moving average is at 482 and dropping rapidly.
With today’s AAPL price of 434, the spread between the Optimal Moving Average and current price is 48 points. Until the price of AAPL breaks convincingly above the Optimal Moving Average with increased volume, expect the bear market in AAPL to continue….much to the chagrin of those who purchased the stock during the height of its popularity last year.
Until the weaker hands give up on the stock, the bear market in AAPL should continue. The first clue would be a clear oversold buy signal in the “Money Flow Indicator” which has called each of the last three rally in AAPL.
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Right now, the Money Flow Indicator is at 23.51 which is in my estimation about one to three days away from flashing a buy signal. With AAPL’s current level of investor apathy, it would not be surprising to see a bottom in the next few days. Manage your chips wisely by taking a small pilot position in AAPL when the Money Flow Indicator reads below 30.
Update March 2: The Money Flow Indicator hit 13.66 with Friday’s close. This is a clear buy signal and the first chance to take a position in Apple. Both the RSI and ULT Indicators are in the low 30s which are also very close to flashing buy signals on any further weakness. Now is the time to gradually wade into this undervalued, oversold, and under-loved high-quality stock!
MARKET OBSERVATIONS FOR FEBRUARY 25, 2013: The stock market hit a new high last Tuesday before embarking on a sharp decline. Friday’s advance recovered most of the previous two-day decline. The market is in the unique position to either test last Tuesday high or test last Thursday low. Don’t be surprised if the market follows a common pattern of heading down towards the end of the month (and rallying in the beginning).
Key market indicators show the following:
With many key breadth indicators near buy signal levels, I would welcome a return to last Thursday’s low with a chance to go long towards an intermediate top in March.
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THE APPLE BEAR MARKET OPTIMIZED MOVING AVERAGE UPDATE FEBRUARY 19, 2013: I have devised a new indicator for Apple which I call the “Apple Bear Market Optimized Moving Average“. It is a 50-day exponential moving average of the price of Apple. It currently has 3 points that served as the top of small rallies since early October 2012. This will help those who want to buy the stock low but want to get out before it turns down again. As of today, the moving average is at 498 and dropping rapidly.
With today’s AAPL price of 460, the spread between the Optimal Moving Average and current price is 38 points. Until the price of AAPL breaks convincingly above the Optimal Moving Average with increased volume, expect the bear market in AAPL to continue….much to the chagrin of those who purchased the stock during the height of its popularity last year.
Until the weaker hands give up on the stock, the bear market in AAPL should continue. The first clue would be a clear oversold buy signal in the “Money Flow Indicator” which has called each of the last three rally in AAPL.
Key Apple indicators show the following:
- Relative Strength Indicator: “42” reading & is more than a week from a buy signal
- Ultimate Indicator: “42” reading and is also more than a week away from a buy signal
- Money Flow Indicator: “55” reading which is far from being a buy signal under 20
Until the “Apple Bear Market Optimized Moving Average” is broken to the upside, the trend is down for this popular stock. And until the Money Flow Indicator gets near 20, it still hasn’t gone enough to an extreme in this most accurate forecasting timer for buying Apple.
Special Note: It looks like a retest of the lows is about to happen. I would look to accumulate AAPL on this retest as it has a good chance of being successful. I would expect a negative “cover story” to cause the weak hands to capitulate on this retest. It may pay to be a day early on your buying of these pilot positions. AAPL has a habit of making huge jumps to the upside when bottoms are reached. Being a day or two late may cost you 30-50 points!
MARKET OBSERVATIONS FOR FEBRUARY 17, 2013: The stock market tested its February 1st during this part week. I would expect one or two more tests of these highs (Dow 14018) in the coming 10 trading days. If we should get a short and sharp decline, it could be an opportune time to go long for a quick trip back up to the old highs. The internal breadth indicators are largely neutral and show that the market has been under a mild correction from within.
Just because the market isn’t going up, don’t assume that it has to go down. It is entirely possible that the market is simply chewing up time before continuing its march higher. And speaking of March, that is the most likely month to expect a more sustained drop in the market. Right now, there are just too many bears predicting the end to this rally. When the bears get quiet, it will probably mean that the final top of this rally is in. We may be close to that time, but I don’t think we are there quite yet.
Key market indicators show the following:
Last week, I mentioned the Long-Term Treasury Bond Fund (TLT), Gold Miners (GDX), Silver Trust (SLV), and the China ETF (FXI) as possible speculations. But based on last Friday’s action, I will resist the temptation to “catch the falling knife” and avoid these stocks until things settle down. As I stated in my book, Wall Street Craps: How to Play Today’s Hot & Cold Stock Market For Fast Money With Less Risk, “buying in a panic is just plain risky.” Most high-percentage bottom are not at points of maximum fear, but instead at points of maximum apathy.
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MARKET OBSERVATIONS FOR FEBRUARY 11, 2013: The stock market looks like it is about the test its February 1st highs. It is only 17 points away the old highs in the Dow. You can expect one to three consecutive closing new highs in this index before it’s ready to turn down for a more extensive correction. If these new highs are not confirmed by equal or greater strength in the Dow Transports, S&P 500, and Nasdaq indices, it would signal that the general market has lost momentum to the upside. But since the internal breadth indicators are largely neutral, the market may simply consolidate at this higher level instead of crashing down. That would confuse and frustrate a lot of traders by doing so.
Key market indicators show the following:
The market is about to test the February 1st highs. The risk-reward ratio is not good for a more extended move to the upside. And because of neutral readings in the breadth indicators, I would not expect the market to drop much either. This is a time to step aside from the market and keep your powder dry for special situations that may appear in either the Long-Term Treasury Bond Fund (TLT), Gold Miners (GDX), Silver Trust (SLV), or the China ETF (FXI).
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MARKET OBSERVATIONS FOR FEBRUARY 5, 2013: The stock market’s advance may be nearing its end sometime this coming week. If we can get another token new high in the Dow that is not confirmed by corresponding strength in the Dow Transportation and Nasdaq Index, it could signify the end of rally and the beginning of a sustainable correction. Smart traders and investors would be wise to sell into any strength during this coming week especially if it comes with “obvious good economic news.” That news will be the signal for all the latecomers who missed the rally to come into the market at precisely the wrong time.
Key market indicators show the following:
This coming week may mark the end of the current rally that started last November. Traders and investors should use any strength to lighten up on any remaining positions. The risk-reward ratio just doesn’t support adding or even holding too many long positions in the stock market at this time. While some issues may continue to rally, the time for the general market has probably come to get out.
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